China upset by EU stance on textiles

China lashed out at the European Union on Sunday after the 25-nation bloc took its dispute with Chinese textile imports to the World Trade Organisation (WTO), forcing an immediate curb in shipments of T-shirts and flax yarn.

“The Chinese side thinks that the European side launched an investigation and made a decision ... based only on three months of data,” commerce ministry spokesperson Chong Quan said in a statement posted on the ministry’s website.
“It’s an inaccurate assessment and an incorrect decision.”

European and United States textile-makers say their livelihoods have been threatened by a surge in Chinese exports since a worldwide quota system ended on January 1.

According to EU figures, Chinese imports of T-shirts rose by 187% in the first four months of 2005, compared with the same period last year, while flax yarn imports rose by 56%.

The EU took the dispute to the WTO on Friday, giving China 15 days to react. It also means that the EU will restrict imports of flax yarn and T-shirts to no greater than 7,5% above the amount entering its market between March 2004 and February 2005.

“It not only sent the wrong signal of trade protectionism to the European industry, it also harmed the rights that Chinese enterprises should enjoy in the globalisation of textile trade,” Chong said.

Under the terms of China’s WTO membership, if another member state can establish that Chinese textiles are disrupting the market, it may request bilateral consultations at the WTO.

The EU said it put the issue before the WTO after a “thorough and fruitful” telephone discussion between EU trade commissioner Peter Mandelson and Chinese Trade Minister Bo Xilai.

But, the EU said, it is still open to discussion outside the WTO framework, if that could lead to a deal.

Chong stressed that China is a “responsible member of the WTO and has already adopted a series of positive measures on its own initiative”, and said Beijing is willing to resolve the problem through dialogue.

Earlier this month, China announced a sharp increase in export tariffs in an effort to avert a trade war with the US and Europe.

The US imposed import quotas in mid-May on Chinese-made cotton pants, underwear, synthetic fibre shirts and other goods. The quotas limit annual growth of Chinese textile imports to 7,5%—well below the 54% jump reported so far this year by the US Commerce Department.

China imposed a 1,3% export tax on textiles in December on the eve of the end of global quotas, but American officials said that was too low to make a difference.—Sapa-AP